The UK has signed a post-Brexit mutual recognition agreement with the US amid mounting concerns that less than half of the EU’s 40 trade agreements will continue for British businesses after the March 29 deadline.
The deal means both parties will continue to recognise the standards of exported goods and will minimise the need for cross-border checks post Brexit.
Total UK-US trade in sectors covered by the deal is worth up to £12.8bn, based on recent average trade flows. Of this, UK exports covered are worth an estimated £8.9bn, more than a fifth of total UK goods exports to the US.
Continuity for exporters is paramount, explains Julian David, CEO of UK technology trade association techUK. “This is a positive step to enable trade continuity with the biggest tech market in the world. Manufacturers value the current agreement so it is very good news that they won’t now have to seek costly alternative arrangements to get approval for products used in high-end manufacturing, smart electronics and consumer devices,” he says.
Earlier this week the UK also signed a continuity agreement with Switzerland, previously revealed to be a priority by UK trade minister Liam Fox as it represents one of the country’s biggest EU trading partners covered by an EU trade deal.
Continuity trade agreements were also signed at the start of the month with Chile, the Faroe Islands and Eastern and Southern Africa. A UK department for international trade (DIT) spokesperson tells GTR that further agreements with Israel and Palestine and the Pacific region are also due in the coming weeks.
Last month mutual recognition agreements were inked with Australia and New Zealand.
All agreements signed so far mirror the terms of those currently in place between the EU and its various trading partners.
Fox faced criticism this week after he publicly conceded that his 2017 promise that all 40 of the EU’s trade agreements, of which the UK is a current beneficiary, would be rolled over “one second after midnight” was now unlikely to come true.
As it stands, the UK will switch to WTO rules with any trading partner it fails to secure a deal with by March 29, which would bring in new tariffs to a wide range of traded goods as the default status. If a deal is struck before the deadline then all 40 agreements are expected to be extended during the transition period, which ends in 2021.
At a recent parliamentary enquiry, Fox claimed the process was “not a numbers game” as of the 40 trade agreements, which represent 12.1% of the UK’s total trade, over half of the agreements the UK must renegotiate only account for less than 1% of total UK trade.
However, of the five largest agreements, which include Canada, Switzerland, the European Economic Area (EEA), South Africa and South Korea, and represent the lion’s share of the UK’s trade at risk, only Switzerland and South Africa are expected to be finalised by March 29.
Following Fox’s admission this week, the International Trade Committee, appointed by the house of commons to oversee the DIT’s activities, has highlighted key trade deals it thinks Fox’s department should prioritise with its remaining time.
The list includes Japan, which accounts for 2% of UK trade, Turkey and South Korea, which each account for 1%.
However, the South Korean government has indicated any deal will require up to three months to ratify once it has been agreed by both parties.
Angus MacNeil MP, chair of the committee, comments: “My committee has repeatedly warned about the considerable risks of not achieving this and it looks like officials are now admitting what has been suspected for a long time: the UK will not be able to roll over all of the EU’s trade agreements with third countries in time for 29 March.
“It is no surprise that countries in the market are acting freely in their own interest rather than just meeting the UK’s expectations. It is time for Dr Fox to face facts and admit this – particularly to businesses, who are in urgent need of proper guidance. Failure to do so could leave businesses unprepared for a change in trading arrangements with some key markets – and the impact for some could be devastating.”
The UK government’s timetable for the final weeks of its negotiation period allows MPs another chance to vote on the previously rejected Cooper Amendment, which in its revised form would now offer Theresa May’s government a mandate to ask the EU for a three-month delay on the Article 50 deadline. Fox voted against several amendments to delay the deadline in January but previously admitted he would consider voting in favour if May’s deal was passed in the commons and facilitated legislation to be implemented within the transition window. The vote is scheduled for February 27, but delays are likely.
The UK’s defence secretary Gavin Williamson was also under fire today for scuppering upcoming UK-China trade talks by threatening to deploy a war ship in the Pacific. According to media reports the comments caused China’s vice premier Hu Chunhua to cancel talks with the UK’s chancellor Philip Hammond due to take place this weekend.